M/S CBATE INTERNATIONAL v. Union of India

1. This first appeal under Section 37 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) is filed against the impugned judgment of the court below dated 23.4.2011 which has dismissed the objections filed by the appellant against the Award dated 9.10.2009.

2. Counsel for the appellant urges that Award which is passed under the 1996 Act has to be a reasoned Award in view of Section 31(3) of the 1996 Act. It is argued that the court below has wrongly ignored Section 2014:DHC:2613 31(3) in the facts of the present case inasmuch as the Award in question dated 9.10.2009 is a non-speaking Award.

3. The disputes between the parties pertain to supply of stone ballast by the appellant to the respondent under a contract and which contract respondent terminated on account of breach by the appellant of failing to supply the requisite quantity as also delay in supplying whatever quantity was supplied.

4. The appellant had filed a claim petition before the arbitrator and the respondent had filed a counter claim. The claim petition pertained to release of payment as also various deposits which were made by the appellant to the respondent and for recovery of deductions made by the respondent from the payment made to the appellant. The counter claim pertained to entitlement of the respondent to adjust all amounts claimed by the appellant on account of risk purchase tender which was issued by the respondent after terminating the contract on account of breaches by the appellant.

5. The arbitration panel of three arbitrators have given the following operative portion of the Award:- “AFTER having heard and fully considered all arguments and evidence of the parties the said disputes and differences and having gone through the materials, papers and documents, and having considered all the matter submitted to us in connection with the aforesaid disputes and differences we do direct and award as follows:- SN Description of claims Amount of claims (Rs.) Amount of award Reasons of amount awarded

1. Extra payment for material supplied at Tanda Yard 2,08,019.00 NIL As per records available, Contractor had given his written consent to supply material in Tanda Yard and also completion period was extended giving them opportunity to complete the work.

2. EMD Amount 50,000.00 NIL This has been adjusted against risk & cost dues of Respondents as risk & cost tender was done for balance work and completed successfully.

3. Amount of Fixed Deposits as Security Deposit 2,50,000.00 NIL This has been adjusted against risk & cost dues of Respondents as risk & balance work and

4. Security Deposit deducted from Running bill. 2,00,732.00 NIL Security Deposit amounting Rs.2,27,957/has been deducted from running bills and has been adjusted against risk & cost dues of Respondents.

5. Amount due against supply of material 2,73,295.00 NIL As per final bill prepared by the respondents the cost of balance material supplied by the claimant is Rs.2,73,295/-. However the same has been adjusted against risk & cost dues of Respondents as risk & the balance work and Total claim of contractor 9,82,046.00 NIL Railway’s Claims SN Description of claims Amount of claims (Rs.) Amount of award Reasons of amount awarded

1. Railway’s Claim on account of risk & cost tender 17,76,783.74 17,44,232.74 As per details made available during hearing and details of counter claims submitted by the respondents total amount to be recovered by Respondents from Claimant due to Risk & Cost tender comes as Rs.25,45,484.74. Respondents already have Rs.8,01,252.00 i.e. [50,000 (Earnest money) + 2,50,000 (Fixed deposit as security deposit) + 2,27,957/- (security deducted from bills) + 2,73,295/- (cost of balance material supplied by claimant)] available against the terminated contract of claimant. Hence only balance amount, of Rs.17,44,232.74 are due to the respondents. Total claim of 17,76,783.74 17,44,232.74

IN CONCLUSION M/S CBATE International shall pay to U.O.I. represented through Dy. Chief Engineer/Const/Jalandhar, Northern Railway (respondent) a sum of Rs.17,44,232.74/- in full and final settlement of all claims/Counter Claims of both the parties arising out of the disputes and counter disputes as referred by the General Manager in his letter No.74-W/1/1/377/WA/JUC/ARB dated 21.04.08. THAT this amount as mentioned above should be paid to RESPONDENT within 45 days from the date of publication of the award failing which amount of award will carry simple interest of 10% thereafter i.e from the 46th day of publishing of this award till the date of payment.”

6. Without question, the Award in this case is a non-speaking Award because there is no discussion in the Award as to how the appellant is held guilty of delay in performance of the contract and as to how respondent is hence justified in issuing the risk purchase tender and thereafter adjusting the amounts which were payable to the appellant. Of course, I am not saying one way or the other on merits because either the case of the appellant can be correct or the case of the respondent can be correct, however, reasons have to be given under the 1996 Act and which are ex facie missing in the impugned Award.

7. In view of the above, the appeal is allowed. Impugned judgment as also the Award dated 9.10.2009 is set aside. In view of the Division Bench judgment of this Court in the case of BSNL Vs. Canara Bank & Anr. 169 (2010) DLT 253 (DB) the matter is remanded back for a fresh decision by the arbitrators already appointed or if one or more of the arbitrators are not available then, to any other arbitrator or arbitrators which the respondent will appoint in accordance with law and the contract between the parties. The arbitrators will take up the case from the stage of final arguments and if the parties also want to lead any evidence, arbitrators will allow the parties to lead additional evidence. The arbitrators will thereafter decide the matter afresh in accordance with law without in any manner being influenced by the fact that earlier an Award dated 9.10.2009 was passed. Arbitration record be given back dasti to the counsel for the respondent who undertakes to give the record to the requisite authority who keeps the arbitration record or directly to the arbitrators themselves. MAY 16, 2014 VALMIKI J. MEHTA, J. Ne